“S&P 500 Trading Cycles Analysis December 2025 | Market Forecast & Price Targets”
Introduction
Welcome everyone to this week’s market analysis. We’ll explore the S&P 500’s movements and outlook for the week of December 22, 2025.
This will be our final update for 2025.
During our first 2026 update, I’ll publish the annual success rate table, continuing our three-year tradition.
Today, we’ll review recent market action and discuss expectations for the coming months. Understanding market cycles helps us make informed trading decisions, and this analysis will provide valuable insights into the S&P 500’s current position and potential future movements.
In my previous update, I highlighted 6,500 as a crucial level to monitor. On Friday, November 21, the S&P 500 reached a low of 6,521.92.
The 18 Month Cycle.
Looking at the long-term picture, the S&P 500 remains in bullish territory. It continues trading well above its cycle line (the FLD) and its cycle trendline (the VTL). We’re expecting the low for this cycle to occur between September and October 2026. When the next 18-month cycle low forms, we need to watch carefully where it positions relative to the cycle line. A cross below this line would provide a potential downside target.
The 40-Week Cycle
The 7,321 target remains valid until the S&P 500 crosses below its cycle line. The only way to invalidate this target is if the market crosses below before reaching it.
During my last update, I mentioned the possibility of the 40-week cycle low forming earlier than expected, perhaps within the first two weeks of December. Could the November 21 low at 6,521.92 be the 40-week cycle low? It’s possible. Since the April 2025 major low, 32 weeks have elapsed to the November 21 low. According to the Hurst Nominal model, which sets the 40-week cycle at 38.97 weeks, this would be almost 7 weeks shorter—very short but not impossible.
The first indication that November 21 might not be the 40-week cycle low is the rally pattern. After the last 18-month cycle, the rally following the first 40-week low should be very bullish. However, this wasn’t the case—the rally lasted only one week, and since then, the S&P 500 has moved sideways. This isn’t the typical characteristic after a first 40-week low formation within an 18-month cycle, though it remains possible.
From a trading perspective, how do we address this uncertainty? I’ll discuss the solution later.
The second point is that I expected the 40-week low to find support on its cycle line. During the November 21 low, the S&P 500 formed its low well above the cycle line, which usually signals bullishness. However, as mentioned, the rally after November 21 wasn’t very convincing. Therefore, I still expect the 40-week cycle low to form by the third week of January around the cycle line near 6,400.
The cycle line as potential support is reasonable since the S&P 500 formed its 6,920.34 40-week peak on the right part of the cycle. When this happens, we typically expect a moderate correction. Even though it’s unlikely, we must keep in mind the possibility that the 40-week cycle low formed on November 21.
Since the 40-week cycle spans about 10 months, from a trading perspective, knowing whether the 40-week low has formed isn’t very important right now. After forming the 40-week low, we can expect the S&P 500 to rally toward the next 40-week cycle peak, still expected around May 2026, with its low between September and October 2026.
The 20-Week Cycle
In my last update, I presented two different options for the formation of this second 20-week cycle. One option was November 17, but on November 21, the S&P 500 formed a 6,521.92 low. The second option, to maintain the Hurst nominal average, suggested this second 20-week cycle should be about 23 weeks long, making January 5, 2026, the best time for the 20-week cycle low formation.
I also expected the S&P 500 to cross below its cycle line (the FLD) during the formation of this second 20-week cycle since the last major April 2025 low. Due to the small rally after the November 21 low, everything favors the second option. If correct, I expect the S&P 500 to cross below its cycle line very soon, providing a potential downside target, probably close to the 40-week cycle line.
On the table, you’ll find the cycle lines and their potential targets for the next few weeks if the S&P 500 crosses below them. In my last monthly update, I also published the 18-month cycle roadmap using the 20-week cycle line. If my preferred option (the second one) is correct, we are currently at this position.
The 20-week cycle is 5 months, which from a trading perspective is very long. For now, knowing whether the 20-week cycle has formed or lies ahead isn’t that important. We know that mid-January could bring a correction, which still provides good guidance for the next few weeks. Since the beginning of the year, the 20-week cycle has a 100% success rate.
If the November 21 low isn’t the 20-week cycle low, which cycle does it belong to? For various reasons, identifying some cycle lows can be difficult—for example, when the market is too bullish or bearish, or when news adds extra volatility. However, one certainty is that cycles never disappear and are active 24 hours a day.
How Do We Fix This Problem?
When we cannot identify with certainty which degree cycle we’re dealing with, the solution is simple. According to Hurst principles, cycles synchronize at their lows. Knowing this, when we face this situation, we move down to lower cycles until we feel confident identifying which cycle we’re dealing with.
Let’s take the current 20-week cycle. Are we confident enough to label November 21 as the low? No. So we move to the next lower cycle—in this case, the 80-day cycle. Let’s see if we’re confident enough to label the 80-day cycle. Since cycles synchronize at their lows, if November 21 is certainly the 80-day low, and since it would be the first 80-day cycle since the August 1 low, and knowing there are two 80-day cycles in one 20-week cycle, then with high confidence, we cannot label the November 21 low as the 20-week low.
If we cannot identify November 21 as the 80-day cycle with certainty, we move to the next lower cycle—the 40-day cycle, and so on—until we can identify a cycle low with confidence. Then we trade that cycle.
The 80-Day Cycle
In my last update, I placed the last 80-day cycle on October 10. This 80-day cycle was 70 days long, 2 days longer than the Hurst nominal model, where the 80-day cycle is 68 days long. With high confidence, we can label the October 10 low as the first 80-day cycle since August 1.
From October 10 to November 21 is only 42 days—very short for an 80-day cycle, exactly 26 days shorter. Adding 68 days to October 10 gives December 17 as the potential date for the next 80-day cycle low. Due to the synchronicity rule, it would also be the 20-week and 40-week cycle low.
In stock market analysis or trading, we must always keep an open mind and consider different scenarios. For that reason, I’m going to play devil’s advocate.
The first scenario: Due to the size of the November 21 correction and since the S&P 500 crossed below its cycle line, there’s a high possibility that November 21 is an 80-day cycle low. In this case, the previous 20-week cycle could be misplaced. If we place the previous 20-week cycle low on September 2, the 20-week cycle would be exactly 20 weeks long. According to the Hurst nominal model, the 20-week cycle has an average of 19.87 weeks. If we add 68 days from September 2, this gives November 9 as a potential date for the 80-day cycle low.
This 80-day cycle would be 80 days long, 12 days longer than the 68 days in the Hurst nominal model, which is within the acceptable time target. In this case, the next 80-day cycle low is expected for the last week of January 2026, which by the rule of synchronicity would also be the 20-week and 40-week low.
After forming its low on November 21, the S&P 500 crossed above its cycle line on November 26 at 6,737.69, providing a potential 6,953.46 upside target. On December 11, the S&P 500 met its target with 6,903.46, only 50 points away or 0.72%. During the November 21 low formation at 6,521.92, the S&P 500 missed its target by 138.56 or 2.17%. Also, on December 17, the S&P 500 crossed back below its cycle line, providing a 6,669.92 downside target.
With 5 positive trading signals out of 7, the success rate for the 80-day cycle is 71.42%. In both cases, the 80-day, 20-week, and 40-week cycles still lie ahead of us.
The red arrows represent the second scenario
The 40-Day Cycle
Let’s see now if we can identify with certainty where the last 40-day cycle formed. Using the above 80-day cycle different scenarios, assuming the last 20-week cycle formed in August, the first 40-day cycle formed on September 2 and the second was on October 10, which is also the 80-day cycle low. The next one was scheduled for November 13, so with confidence, we can label November 21 as the 40-day cycle low with certainty.
The last one is expected on December 25, which will also be the 80-day, 20-week, and 40-week cycle. Now using the second scenario, the first 40-day cycle was on October 10, and the second one was scheduled for November 13, which also would be the 80-day low. So in both cases, November 21 is a 40-day cycle. With certainty, we can label November 21 as a 40-day cycle.
The next one is scheduled for December 25 and the last on January 28, 2026. Since the 40-day cycle is the one we can identify with certainty, that’s the one we can trade. To trade it, we need to create a 40-day roadmap using the 10-day cycle line. To create this roadmap, I advise visiting my blog at tradingmarketcycles.com, where you’ll find the article “How to Construct a Roadmap.”
During its November 21 low formation, the S&P 500 missed its 6,480 target by only 41 points or 0.66%. Since 0.66% is within the 1% margin of error, we consider the market met its target. On December 3, the S&P 500 crossed back above its cycle line at 6,833.45, providing a 7,144.98 target, representing 311 dollars or 4.55% of potential profit.
With 4 positive signals out of 4, the 40-day cycle has a 100% success rate.
The red arrows represent the second scenario
Conclusion
To summarize, we’ve analyzed multiple market cycles to understand the S&P 500’s current position and future direction.
While uncertainty exists about whether some cycle lows have already formed, the 40-day cycle provides our most reliable trading opportunity with a 100% success rate.
By working down from larger to smaller cycles, we can identify tradeable patterns with confidence. The coming weeks should reveal whether our mid-January correction scenario plays out.
Stay disciplined with your analysis, and I’ll see you in the first 2026 update with our annual success rate review.